Five Star Business Finance Limited, incorporated in 1984, is a Non-Banking Finance Company (NBFC) that offers micro-entrepreneurs and sole proprietors access to secured business loans.
As of September 30, 2021, the company’s large network of 268 branches covers around 126 districts in eight states and one union territory, with the most important states being Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka.
Five Star Business Finance Limited’s business concept is predicated on determining a suitable risk framework and the perfect installment-to-income ratio to guarantee that borrowers have sufficient funds to repay the loan after satisfying all other financial commitments and emergency funding needs.
Company operations are heavily concentrated in southern India, with headquarters in Chennai, Tamil Nadu. A total of 4,306 people were working for the company as of September 30, 2021.
Over the years, the company has helped over 185,000 people by way of loan. On March 31, 2021, they had a loan base of 176,467 that was actively being used.
The firm’s AUM of over $30,000,000,000 makes it the industry leader in AUM growth. The company had Rs. 28,542.54 million in Total Borrowings as of September 30, 2021, and Rs. 34,251.97 million as of March 31, 2021.
Five Star Business Finance IPO Synopsis :
Five Star Business Finance has submitted its IPO application to SEBI in an effort to raise Rs.2,752 crore. The DRHP claims that the entire publication constitutes an invitation to bid. Shares valued at Rs.257.10 crore are being sold by SCI Investments, Rs.568.92 crore are being sold by Matrix Partners India Investments II Extension LLC, Rs.385.65 crore are being sold by Norwest Venture Partners X-Mauritius, and Rs.1,349.78 crore are being sold by TPG Asia VII SF Pte Ltd as part of the OFS.
To date, TPG Asia has a 20.99% ownership, Matrix Partners 14%, and Norwest 10.22%. ICICI Securities, Kotak Mahindra Capital Company, Edelweiss Financial Services, and Nomura Financial Advisory and Securities Pvt ltd are the book running lead managers for this issue.
Objectives of the issue :
The primary goal of the issue is to profit from the company’s listing on stock exchanges.
IPO Key Points :
1. Five Star Business Finance has the fastest AUM growth among its peers, with over Rs.3,000 crore in AUM, as well as strong growth and returns.
2. One of the few institutions in the country that has developed an underwriting model that analyses the cash flows of small business owners and self-employed individuals in order to make loans to them.
3. The company’s calculated approach allows it to expand into previously untapped geographical areas.
4. They have experienced and qualified promoters, as well as a highly professional management team backed by marquee investors.
1. A significant amount of capital is required to run the business, and the company obtains it from various external sources; thus, the entire business is entirely dependent on the timely availability of these funds.
2. The main, inherent risk is that the borrowers will not repay the loans, and the risk is higher in this case because the customer group is primarily middle and lower income, and there is a high likelihood of default among these small business owners and self-employed people.
3. To add to the preceding point, many of the borrowers are first-time borrowers, which increases the risk of default.
4. Interest rate volatility may have a negative impact on net interest income.
Five Star Business Finance IPO Timeline :
The IPO date for Five Star Business Finance has not yet been set, but the company is expected to go public in October 2022, according to market speculation.
Five Star Business Finance Technologies IPO will raise approximately 2,751.95 crores through an IPO that will include a fresh issue of [.] crores and an offer for sale of up to 2,751.95 crores of 1 each. The retail quota is 35%, the QIB quota is 50%, and the HNI quota is 15%.